Investors’ meet on for underwriting package for Jaitapur reactors even as protests continue

Vaiju Naravane

A crucial investors’ meeting to underwrite the financial package for two 1,650 megawatt Areva EPR reactors to be built in Jaitapur, Maharashtra, got under way here with a top four-man team from India, including officials from the Department of Atomic Energy (DAE) and the Nuclear Power Corporation of India (NPCIL). Senior executives from Areva, the French nuclear giant, several banks and government agencies are also attending the meeting.

The meeting coincides with large-scale protests in Maharashtra against plans to build the two giant nuclear reactors. Hundreds of local farmers have signed petitions saying they do not wish to have their lands requisitioned or the giant reactors to be located close to where they live. Non-governmental organisations fighting plans to build the reactors say the project is located on a seismic site.

The Indian team in Paris is made up of four officials. C.B.S. Venkataraman, Additional Secretary and Niranjan Kumar, Deputy Secretary are from the DAE, while Preman Dinaraj (Financial Director) and Sandeep Singhroy (Director Jaitapur project) are from the NPCIL.

Soaring costs a concern

There have been serious concerns in India over the soaring costs of these reactors. Initially, India is expected to finalise an agreement for the purchase of two EPRs. This is expected to go up to six such reactors. The main sticking points in the discussions so far have been the cost of energy to India per kW/hour coupled with security concerns following the Fukushima nuclear catastrophe in Japan. Areva had initially promised India that energy from the reactors would not cost more that Rs. 4 per kW/h. But since the cost of each reactor has gone up from 3.3 billion Euros to 8.5 billion Euros, it would be a miracle if Areva is able to keep the cost of energy within the original framework.

Anne Lauvergeon, former chief of Areva, had told The Hindu in an interview two years ago that the “four rupee target” would be “maintained at all cost”. But the French have been unable to manage costs within their own country. The only EPR currently under construction in France at Flamanville has had massive cost overruns and is five years behind schedule. However, the two EPRs being built at Taishan in China are said to be going ahead at a terrific pace, being built to cost and to schedule.

“Since the reactors will be built by the NPCIL, the cost factor will definitely be lower in India, perhaps even 30 per cent lower than it is in France. There is, however, cause for worry and the talks in Paris will focus on reducing costs to a minimum without sacrificing safety or quality,” a well placed source close to the talks told this correspondent in Paris.

Members of the Konkan Bachao Samiti said that according to their calculations, the unit cost per kilowatt/ hour will be Rs. 14 per unit. The exact cost of each EPR in India has not been disclosed.

“Three important factors”

“There are three important factors in determining the price of a kilowatt/hour of nuclear electricity. The first is the cost of building the plant. The second element is the cost of borrowing the money. What rate of interest will India have to pay? The third element is the capacity at which the plant runs. If it fails to run at 100 per cent capacity, the costs inevitably go up,” Steve Thomas, a specialist on nuclear energy at Greenwich University’s School of Business told The Hindu.

None of these issues have been properly outlined to the public and no figures have been have been released either by the DAE or the NPCIL, which has angered opponents of the project. The project will supposedly have a 70:30 debt equity ratio.

Members of the Konkan Bachao Samiti said the meeting under way in Paris was kept secret to prevent demonstrations in India. However, word of the meeting leaked out. In a letter to French bankers, the Konkan Bachao Samiti said: “NPCIL and government of India officials are making wrong representations, concealing the ground information, twisting and distorting the facts and are trying their level best to delude you [investors], in order to make you agreeable and secure loan finance for this mega disaster project.”